Monday, April 3, 2017

The Truth Behind the Myths of Short Term Loans

The Truth Behind the Myths of Short Term Loans

Some people call payday loans predatory lending; some say that short term loans get poor people into cycles of debt; others say that only desperate people choose to use these loans. We have an alternative view that is much more positive. The people who perpetuate these myths are the people who never need to rely on these loans. Let’s get behind the popular myths about short term loans and get to the truth.

Myth #1 – Short Term Loans Are Only for the Desperate

Anyone who has used short term loans would resent this characterization. People who take advantage of this kind of loan know what they are doing. They are as capable as anyone else of making informed decisions about money and borrowing. They know that they have multiple options when it comes to borrowing money and that they are not all one-size-fits-all. Some loans work better for some people and sometimes just for a particular situation. For instance, short term loans are great for those times you need just a small amount of cash, but you need it quickly.

Myth #2 – Short Term Loans Are Not Affordable

The interest rates on short term loans are higher in general than the rates on other loans. This fact has led a number of critics to say that no one can realistically afford the loans. There are very good reasons for the higher rates, though. These loans have short terms. This means borrowers have the debt for only a week or two. The result is that they pay just a little bit in interest, maybe $20 or $30 per loan, a reasonable fee that gets them quicker cash than other, longer term loans.

Myth #3 – Lenders Offering Short Term Loans Prey on Poor People

Lenders that offer short term loans are not evil people out to make only a buck. And they certainly aren’t out to trap poor people. What kind of money can be made from people who have none, after all? If you apply for these loans you’ll see that there are few requirements, but one important requirement is that you have a job and a certain income level. These lenders will not give loans to you if you do not have the income to be able to repay the loan. It just doesn’t make sense to do so.

Myth #4 – Short Term Loans Lead to Unending Debt Cycle

Another big myth about short term loans and payday loans is that once you get into them you never get out. This is more of a reality for credit card debt than for these loans. Our lenders actually want you to repay your loan. This is why they consider income and job history such important factors for getting approved. They want you to be able to take advantage of the quick cash, use it to improve your circumstances, and then repay it with your next paycheck. These loans were not designed to be a cycle of debt, but to be a one-time deal. Now that you know the truth behind these myths, apply for short term loans whenever you could use the extra cash.